Part 3 – Region of Peel

Peel's Construction Sector

A myriad of influenced generated mixed changes in Peel’s construction sector in 2016

In 2016, a number of factors influenced the performance of Peel’s construction sector resulting in relatively mixed changes in prime indicators of the sector’s performance. Chief among the influences were the continuation of an accommodative macroeconomic environment in which interest rates remained relatively low, continued growth in employment in Peel, and government policy changes:

Relatively low interest rates: This remained a feature of the Canadian economy in 2016. The Bank of Canada’s trendsetting overnight interest rate remained unchanged at 0.5 per cent throughout the year. In tandem, the 5-year average residential lending rate remained unchanged at 4.67 per cent.

Higher employment: Peel’s labour market continued to show positive changes in 2016 with total employment rising by 5.0 per cent, and Peel’s unemployment rate falling further from 7.7 per cent in 2015 to 7.3 per cent in 2016. In addition, the proportion of Peel’s working age residents (15 years and over) who were employed in 2016 rose slightly (by 0.3 percentage points) to 63.9 per cent. Higher employment usually indicates increased affordability of goods and services, including goods from the construction sector (including housing). Employment in the broader Toronto Census Metropolitan Area (CMA) registered growth, up 1.2 per cent (38,300 persons). Ontario’s labour market registered a 1.1 per cent (76,400 persons) during the same time period.

Public policy: Update of the Development Charges (DC) By-Law in Peel Region: There was no DC By-Law revision in Peel Region in 2016. However, a new DC By-Law was implemented in Peel on October 5, 2015. The implementation of a new or updated By-Law is generally associated with increased DC rates and typically influences developers to bring forward building permit applications to avoid increased rates. This influenced the strong growth in the value of building permits issued in Peel in 2015. In 2016, the year after the By-Law update, the level of applications for building permits fell off reflecting (1) a return to more normal levels of activities and (2) a falloff in building permits application after some were brought forward the year before. Therefore, when activities in 2016 are compared with those of the preceding year, a decline was observed.

New mortgage rules to strengthen the Canadian housing sector: Changes in regulation by the Canadian Housing and Mortgage Corporation (CMHC): In October 2016, CMHC announced additional measures aimed at strengthening the Canadian housing sector. The measures included an expanded mortgage rate stress test to all new insured mortgages, including buyers with 20 per cent or more as down payment. This requires that home buyers are assessed for mortgages at a mortgage interest rate which is the average of the posted rates of the big six banks in Canada. In 2016, this rate was about 4.64 per cent. The new measures also included the requirement for “low ratio” insurance mortgages to have an amortization period of 25 years or less, and should be less than $1 million in value. In addition, there is a new requirement that the sale of the primary residence must be reported at tax time to the Canada Revenue Agency. The government has also launched consultations with mortgage lenders on lender risk sharing. These measures have been added to others which have been put in place particularly since the 2008 global financial crisis. They are designed to minimize the risk of a United States type housing sector meltdown in Canada.

These generated mixed changes in prime construction indicators during the year. Changes in the total value of building permits and the number of housing starts in Peel were negative, but resale housing activities continued to grow

Building permits

In 2016, building intentions in Peel, as measured by the total value of building permits issued, was approximately $3.50 billion, representing a 20.8 per cent reduction from the previous year(see figure 24).As a dollar amount, the decrease denotes approximately $916.84 million lower in building permit receipts. The decline in 2016 followed very positive performances in 2014 and 2015, when the total value of building permits issued advanced by 39.3 per cent and 21.7 per cent respectively.

The strong growth exhibited in 2014 and 2015 were results of DC by-laws updated during those years. In 2014, each municipality implemented updates to their DC By-Laws, and in 2015, Peel updated the Regional DC By-law. Prior to these updates in both years, developers brought forward more building permit applications resulting in higher building permit values in Peel. Due to the absence of any similar government policy update in 2016, the reduction in the total value of building permits was expected. Therefore, the decline observed in 2016 was not representative of underlying changes in building activities within the Region of Peel, but rather a fall off after policy induced growth in the previous years.

Changes by Major Sectors

In 2016, the decrease in the total value of building permits in Peel Region was attributed to reductions in both the residential and non-residential sub-sectors(see figure 25). The total value of residential building permits issued in 2016 was $2.40 billion, which when compared to the previous year, represented a 22.1 per cent decline or $682.36 million reduction in the total value of building permits issued.

Similar to that of the residential sector, the total value of non-residential building permits also registered a decrease in 2016. With a decline of 17.7 per cent, the total value of non-residential building permits fell from $1.32 billion in 2015 to $1.09 billion in 2016.  This was attributed to lower building permit values in the industrial and institutional sub-categories. The total value of industrial building permits in 2016 was $237.52 million, which represented a 48.7 per cent decrease from 2015. The institutional sub-category registered a 20.2 per cent decline which brought the total value of institutional building permits to $260.1 million in 2016. The decreases in these two sub-categories accounted for the total decline within the non-residential sector in 2016. The commercial sub-category was the only one that registered growth, as there was an increase of 10.6 per cent. This brought the total value of commercial building permits to $592.68 million.

Changes by Municipality

Two of the three Peel municipalities registered decreases in the total value of building permits issued in 2016 to underpin the 22.1 per cent decline in the total value of building permits issued(see figure 26). In the Town of Caledon the total value of building permits issued in 2016 amounted to $255.22 million, down 37.5 per cent from the previous year. The decline was concentrated in the residential sector where the total building permit value decreased 51.6 per cent to reach $165.72 million. Though there was an increase in the total value of non-residential building permits in 2016, it was not significant enough to offset the overall decline in the Town of Caledon during the year. In 2016, the total value of non-residential building permits in Caledon reached $89.49 million, up 35.1 per cent from 2015.

Similar to the Town of Caledon, there was a decrease in building intention within the City of Brampton in 2016. The total value of building permits issued amounted to $1.96 billion, which was a decline of 28.2 per cent from the previous year.  The decreases observed were in both the residential and non-residential sub-sectors. The total value of residential building permits fell 26.5 per cent to $1.61 billion, while the total value of non-residential building permits fell by 35.0 per cent to $351.72 million.

In contrast to the other Peel municipalities, there was an increase in the total value of building permits in the City of Mississauga in 2016. With the total value amounting to approximately $1.28 billion, the increase was 0.7 per cent. This was not significant enough to offset the declines observed in the City of Brampton and the Town of Caledon, and as such, the net change in Peel Region was negative. The observed increase in the City of Mississauga was reflective of changes within the residential sub-sector. In 2016, the total value of residential building permits increased 14.0 per cent to reach $626.15 million. Within that same period, the total value of non-residential building permits decreased 9.6 per cent to reach $649.09 million.


Changes by GTA Region

The total value of building permits issued in the GTA in 2016 was $19.14 billion, down 0.8 per cent from the previous year(see figure 27). Of all the GTA Regions observed, Metro Toronto accounted for the largest total value of building permits issued, at $7.26 billion. Peel accounted for the third largest value of building permits issued in 2016 ($3.50 billion), behind York ($4.65 billion).  

Three of the five GTA Regions experienced growth in the value of building permits issued in 2016. The Region of York registered the strongest growth with the total value of building permits increasing by 21.5 per cent during the year. The Regions of Halton and Durham also registered increases in the total value of building permits issued, registering growth rates of 19.0 per cent and 10.6 per cent respectively.

Peel Region and Metro Toronto were the two Regions that experienced declines in 2016. Following two consecutive years of growth, Peel registered a 20.8 decrease in 2016, while the total value of building permits issued in Metro Toronto declined by 7.1 per cent  during the same period.  

With the declines in the total value of building permits issued in 2016, Peel’s share of the GTA market decreased from 22.9 per cent in 2015 to 18.3 per cent in 2016. The Region of York accounted for 24.3 per cent of the GTA market.  The remaining three regions (Durham, Halton and Metro Toronto) made up the rest of the market as follows: Metro Toronto 37.9 per cent, Halton 11.2 per cent and Durham 8.3 per cent.

Housing Starts in Peel

Peel’s annual housing starts activities continued to fluctuate in 2016

In 2016, the total number of housing starts recorded in Peel Region was 5,362, down 33.8 per cent from the previous year(see figure 28). This came after a year of exceptional growth (75.8 per cent in 2015).


The sharp deceleration in the rate of change in total housing starts in Peel was not unexpected(see figure 29). Many different factors may have underpinned the decline observed but could mainly reflect influences from the following:

  • Lumpiness in multiple starts: The main source of the variation was changes in the multiple segment of the market and more so in the City of Mississauga, a city that is almost fully built. Changes in multiple starts tend to be lumpy because of a key characteristic of that segment of the market. One large multi-residential project with a large number of units can influence the total number of multiple starts in one period. In 2015, the number of multiple units registered was at a multi-year high of 2,511 units. However, with the absence of any such large project in 2016, the comparison with 2015 resulted in the 33.8 per cent observed.
  • Response to policy: In 2014 and 2015 the changes in the total value of building permits issued were robust at 39.3 per cent and 21.7 per cent respectively. Growth during the two years was triggered by the implementation of new DC By-Laws at the municipal levels in 2014 and at the Regional level in 2015. The increased demand for building permits may have supported the increase in housing starts in 2015 as developers acted on the lower cost building permits acquired before the implementation of the new By-Laws. There was no such policy influence in 2016.

The 5,362 housing starts registered in 2016 were lower than the 8,100 starts registered in 2015 but were comparable to 4,607 starts registered in 2014. With the exception of 2015, the number of housing starts registered in Peel since 2009 have varied below 7,300 units; the average number of starts registered in the ten years prior to the market peak in 2002. The Region has identified 6,000 housing starts per annum as the level will support economic growth and development in Peel at a sustainable rate. Over the past five years, there has been an annual average of 6,200 starts, which is broadly in line with the determined target.


Housing Starts by Market Segment

In 2016, the number of single starts registered in Peel was 3,158 units, up 3.5 per cent relative to that registered in 2015(see figure 30).Compared to the 36.8 per cent growth registered in 2015, the observed growth was a significant deceleration. In contrast to the change in the single segment of the market, there was a decrease in multiple housing starts in 2016. From 5,049 multiple starts in 2015, there was a marked slowdown in 2016 when 2,204 units were recorded. This was a 56.3 per cent decline or 2,845 units below the level attained in 2015.


Given the differences in the changes observed in the two housing start categories, there was a noticeable shift in the shares between the multiple and single segments of Peel’s housing starts in 2016(see figure 31). The single starts accounted for 58.9 per cent of the total, while multiple starts accounted for the remaining 41.1 per cent. Considering that single starts controlled 37.7 per cent of the total starts and multiple starts 62.3 per cent in 2015, the shares observed in 2016 represented a major shift in the market.

Though 2016 was characterized by decreases in multiple housing starts in all three municipalities in Peel Region, the decline in the City of Mississauga was the largest, reflecting the relative maturity of that city. Given that the City of Mississauga is almost fully built, more of the housing starts activities are in the multiple segment of the market as the city shifts to intensification (higher population density) to accommodate additional growth. The multiple segment of the market is subjected to wide swings due to the lumpiness of these projects. The significant decline registered in the City of Mississauga followed a strong increase in the preceding year.

Housing Starts by Municipality

Each of the three municipalities within the Region of Peel registered decreases in total housing starts in 2016(see table 1). Compared with activities in 2015, the market this year has softened(see figure 32).


City of Mississauga

Of Peel’s three municipalities, the City of Mississauga registered the greatest level of decline in the number of housing starts in 2016. There was a 66.0 per cent drop in total starts in the City, representing a reduction of 1,773 housing starts. Though decreases were observed in both segments of the market, the decline was mostly concentrated within the multiple starts reflecting the variability which is characteristic of this market segment.

Town of Caledon

In the Town of Caledon, there was 51.2 per cent decline in housing starts in 2016, when compared with that observed in 2015. This equates to a reduction of 412 starts. This decline reduced the total number of starts registered in the Town of Caledon for the year to 392 units, the lowest since 2010.

City of Brampton

Similar to the changes observed in the other two municipalities, the City of Brampton also experienced lower levels of housing start activities in 2016. However, at -12.0 per cent, this was the lowest level of decline among Peel’s three municipalities. Like the other municipalities, multiple starts decreased significantly in the City of Brampton registering 1,335 units, a decline of 42.5 per cent. The number of single starts increased by 19.1 per cent, which slightly offset the decline in multiple starts.

Housing Starts by Geography

Observing housing start activities in 2016 in the Region of Peel, Toronto CMA and GTA, all three had a lackluster year in terms of market growth(see figure 33). As stated earlier, the Region of Peel recorded a 33.8 per cent decline in housing starts this year, equating to a reduction of 3,815 units. Toronto CMA also exhibited negative growth this year, though it was not as significant as that observed in Peel Region. In 2016, there was a decline of 7.7 per cent in the Toronto CMA which is equivalent to a decrease of 3,260 starts compared to the preceding year. Registering 40,277 housing starts for the year, the GTA’s total starts were down 8.7 per cent which represents a decline of 3,815 total starts relative to 2015. This means that the level of decline in Peel was greater than that observed at the Toronto CMA and GTA areas.

Characteristic of all three municipalities, the single starts segment of the market strengthened while the multiple starts segment weakened. Since the increase in single housing starts within all three municipalities was not significant, it did not manage to offset the heavy decreases recorded in multiple starts. Therefore, the total housing start numbers in 2016 suffered as a result.

New Housing Price Index

As a whole, the New Housing Price Index (NHPI) in Canada registered a 2.5 per cent increase in 2016(see figure 34). The increase marked seven consecutive years of growth and was the strongest recorded change since 2009 (recession). Of the cities observed, all but one of the cities registered an increase in the NHPI. With a 1.0 per cent decrease, Ottawa-Gatineau was the only city which experienced a decline. In 2016, the percentage increase in the NHPI in Toronto CMA & Oshawa was 6.3 per cent which was the largest recorded out of all the cities observed(see figure 35). At 4.6 per cent, Vancouver recorded the second highest growth, followed by London with a 2.1 per cent increase.

The growth observed in Toronto CMA & Oshawa was more than twice that observed at the national level. There are a number of factors which may have resulted in the relatively strong growth observed in Toronto CMA & Oshawa, including:

  • Low supply of housing;
  • Heightened demand as a result of (1) the low interest rate which currently exist, and (2) increased immigration; and
  • Market speculation.

In 2009, the changes in new housing prices at the national level and in the Toronto CMA (including Oshawa) were negative at -2.5 per cent and -0.7 per cent respectively. However, since then, there has been a sustained increase in the index both in Canada and Toronto CMA (including Oshawa).


Toronto CMA (including Oshawa) led the increase in new housing prices at
6.3 per cent in 2016.

Residential Resale Market

In 2016, a total of 23,673 residential resale units were sold in Peel Region. At that level, the market surpassed the level of activities registered in 2007 before the onset of the recession.

The growth in activities in Peel’s residential resale market accelerated in 2016. When compared with 2015, the total number of residential resale units sold in Peel increased by 12.8 per cent to 23,673 units. This was the strongest annual growth observed since the market downturn in 2008(see figure 36).

After the 2007 economic downturn, the Canadian government commenced the introduction of measures aimed at strengthening the Canadian housing market. These measures included the reduction in the mortgage amortization period, and an increase in the amount required as a down payment on the purchase of a house. In 2008, there was a 21.4 per cent decline in the number of units sold in Peel. The market recovered somewhat in 2009 with an 11.5 per cent increase in the number of units sold. For the subsequent four year period (2010 – 2013), the number of residential resale units sold in Peel registered annual declines, falling from 19,229 units sold in 2009 to 18,489 units sold in 2013. This period coincided with a number of new regulations put in place to further strengthen the Canadian housing market. These included:

  • A requirement for 20.0 per cent down payment for homes acquired for speculative purposes;
  • Maximum borrowing for refinancing homes reduced gradually from 95.0 per cent to 90.0 per cent;
  • Reduction in the maximum amortization period for a high-ratio insured mortgage to 30 years in 2011, and further tightened in 2012 to a maximum of 25 years;
  • A stress test to ensure that debt costs are no more than 44 per cent of income for lenders seeking a high-ratio mortgage;
  • A reduction in the maximum amount that Canadians can borrow through refinancing to 85.0 per cent in 2011 and further to 80.0 per cent in 2012;
  • The introduction of a stress test to ensure that debt costs are no more than 44.0 per cent of income for lenders seeking a high-ratio mortgage; and
  • The introduction of measures limiting the availability of government-backed insured high-ratio mortgages to homes valued at less than $1-million.

Beginning 2014, growth returned to the market, and accelerated in each of the subsequent years from 5.1 per cent in 2014 to 8.0 per cent in 2015 and 12.8 per cent in 2016(see figure 37).


Residential housing resale by Municipalities

The increase in activities in Peel’s residential resale market in 2016 was the result of growth in all three municipalities as follows:

  • The City of Brampton: 10,964 units, up 17.1 per cent;
  • The Town of Caledon: 1,125 units, up 12.6 per cent; and
  • The City of Mississauga: 11,584 units, up 9.0 per cent.

For the third consecutive year, the strongest growth was observed in the City of Brampton, while growth in the City of Mississauga lagged behind that registered by both the City of Brampton and the Town of Caledon. As a result, the City of Brampton has increased its market share of residential resale activities over the three year period from 42.9 per cent in 2014 to 46.3 per cent in 2016. In 2007, a decade earlier, activities in the City of Brampton accounted for 37.2 per cent of total residential resale activities in Peel. The increase in the City of Brampton reflected, in part, the growth in dwelling counts (housing stock) over the period. With this, there is an increasing number of housing units, raising the probability of increased resale activities.

Activities in the City of Mississauga also increased. Over the period 2014 – 2016, the number of residential resale units sold in the City of Mississauga increased from 10,181 units to 11,584 units respectively. However, with the slower pace of growth during the period, the share of activities accounted for by the City of Mississauga declined during the period from 52.7 per cent in 2014 to 48.9 per cent in 2016. In 2007, residential resale activities in the City of Mississauga accounted for 59.1 per cent of total activities in Peel Region.

Activities in the Town of Caledon increased over the period resulting in a moderate increase in the share of the market as follows:

  • 2007: 3.7 per cent;
  • 2014: 4.7 per cent; and
  • 2016: 4.8 per cent.

Residential Housing Resale Market – Average Price

In 2016, increasing activities in Peel’s residential resale market continued alongside increasing average prices. The average price of a unit sold in Peel rose by 16.9 per cent to reach approximately $616,000(see figure 38). This was almost twice the 8.8 per cent growth registered in 2015. 

Although the pace of growth in average prices accelerated in 2016, the 16.9 per cent growth was lower than that observed in most regions in the Greater Toronto Area (GTA), as well as the 17.3 per cent increase in the average price for the GTA as a whole. As such, Peel Region remained one of the most price competitive regions in the GTA in 2016.

Residential Housing Resale Market – Median Price

The median price of a residential resale unit sold in Peel also increased in 2016, up 18.3 per cent to approximately $570,000(see figure 39). At this level, the median price in Peel Region remained competitive with the price in Durham at $503,000, being the only one below Peel’s average.

Three regions in the GTA registered higher changes in median price than that recorded in Peel Region. They were:

  • Durham Region: 21.2 per cent;
  • Halton Region: 20.1 per cent; and
  • York Region: 18.8 per cent.

The median price in Toronto increased by 13.0 per cent in 2016 and influenced a 15.5 per cent change in the median price of the GTA as a whole.

Residential resale housing activities in the Greater Toronto Area (GTA)

For the full year 2016, the total number of units sold in the GTA increased by 11.8 per cent to 113,133 units. The average price per unit sold in the GTA increased by 17.3 per cent during the same period. 2016 marked the third consecutive year that the rate of change in average price for the GTA exceeded that of Peel.

Since 2008, the average price of a resale housing unit in Peel has increased by over 60.0 per cent, while that in the GTA has increased by over 90.0 per cent. Average prices have continued to rise across the GTA despite a number of changes to regulations that govern the Canadian housing market. The new regulations are designed to strengthen the Canadian housing market and reduce the risk of challenges such as those which occurred in the United States in the mid-2000, ushering in the 2008 economic downturn.

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